CALGARY, March 6 /CNW/ - Resilient Resources Ltd. ("Resilient") (TSX:RRL)
and Guardian Exploration Inc. ("Guardian") are pleased to announce that they
have entered into an amalgamation agreement dated March 3, 2006 (the
"Agreement") pursuant to which Resilient and Guardian would amalgamate (the
"Amalgamation") and continue under the name "Guardian Exploration Inc." with a
new management team and board of directors. The board of directors of
Resilient has engaged Wolverton Securities Ltd. as its independent financial
advisor to prepare an opinion as to whether the share exchange ratio under the
Amalgamation is fair, from a financial point of view, to Resilient's
shareholders. The Amalgamation is expected to be completed by April 13, 2006.
About Guardian
--------------
Guardian is a private oil and gas exploration and development company
with oil and gas assets located in northeast British Columbia. Guardian has
current production of approximately 1.2 MMcf/d (200 Boe/d) and approximately
9,300 gross (3,000 net) acres of undeveloped lands. Guardian holds a 26.55%
working interest in the Clarke Lake Pine Point "E" Pool assets and interests
in the Kotcho, B.C. area including two gas wells. Guardian is also pursuing a
number of other oil and gas prospects in northeast B.C. and Alberta. McDaniel
& Associates Consultants Ltd. ("McDaniel"), independent petroleum engineers,
have attributed approximately 3 Bcf of proved plus probable reserves to
Guardian's properties (based on McDaniel's forecast pricing) and have assigned
approximately $13.4 million to the net present value of future net revenue
from Guardian's properties (based on McDaniel's forecast pricing and
discounted at 10%), both effective as of September 1, 2005. Guardian has
engaged Wellington West Capital Markets Inc. to complete a brokered private
placement of up to 10,769,230 common shares at $0.65 per share and up to
4,000,000 common shares to be issued on a "flow-through" basis at $0.75 per
share (the "Guardian Private Placement"). Wolverton Securities Ltd. is a
member of the syndicate for the Guardian Private Placement. Closing of the
Guardian Private Placement is expected to occur on or about March 17, 2006 and
is not conditional upon the completion of the Amalgamation. Guardian also has
an agreement in principle to acquire a working interest in northeast B.C. gas
assets for approximately $4,200,000 (the "Acquisition"). The Acquisition is
expected to add approximately 2.8 Bcf of proved plus probable reserves to
Guardian's properties (based on McDaniel's forecast pricing and discounted at
10%) and McDaniel has assigned approximately $12.3 million to the net present
value of future net revenue from the assets to be acquired under the
Acquisition, both effective as of September 1, 2005. Guardian intends to
complete the Acquisition following the closing of the Guardian Private
Placement, provided sufficient funds are raised under the Guardian Private
Placement.
It is a condition to the completion of the Amalgamation that the Guardian
Private Placement and the Acquisition be completed.
About Resilient
---------------
Resilient controls 100,000 acres of land on the Blackfeet Indian Reserve
in Northern Montana. The lands host opportunities for the discovery of oil and
gas in the Bow Island, Glauconite channel sands, Cutbank, Mississippian and
Devonian formations. There are several prolific fields surrounding these lands
and, if the Amalgamation is completed, the management of the amalgamated
company plans to undertake a full geological and geophysical study of these
formations and additional formations which they believe may exist. Resilient
also has Canadian tax losses of approximately $12 million and United States
tax losses of approximately $22 million.
About the Amalgamated Company
-----------------------------
On a pro forma combined basis the amalgamated company will have:
- initial daily production of approximately 1.6 MMcf/d (267 Boe/d);
- approximately 100,000 net acres of undeveloped land in Montana and
approximately 3,000 net acres of undeveloped land in northeast British
Columbia;
- realizable Canadian tax losses of approximately $12 million and United
States tax losses of approximately $22 million;
- approximately 5.7 Bcf of proved plus probable reserves (based on
McDaniel's forecast pricing) and net present value of future net
revenue from such reserves of approximately $25.7 million (based on
McDaniel's forecast pricing and discounted at 10%), all effective as
of September 1, 2005;
- 20 million common shares outstanding; and
- working capital of approximately $2.5 million (assuming the maximum
gross proceeds are raised under the Guardian Private Placement).
- The amalgamated company will have Guardian's existing management team
comprised of:
Graydon L. M. Kowal, President
David G. Mallory, Vice President, Finance and Chief Financial Officer
William L. McKenzie, Vice President, Exploration
Graydon L. M. Kowal has been the President and Chief Executive Officer of
Guardian since 2001. He has been active in the petroleum industry in Alberta
and British Columbia for the last 15 years. Since 1995, Mr. Kowal has been the
President and Chief Executive Officer of Guardian Helicopters Inc., a private
helicopter company serving the oil and gas industry in Alberta, British
Columbia and Montana, as well as the forest industry in Western Canada and
Ontario.
David G. Mallory has been Vice President, Finance and Chief Financial
Officer of Guardian since December 2004. Mr. Mallory was Chief Financial
Officer of Flowing Energy Corporation, a public oil and gas company listed on
the Toronto Stock Exchange, from September 2000 to May 2004 and a director
from March 2001 to May 2004. He was co-founder and Chief Financial Officer of
Questerre Energy Corporation, a public oil and gas company listed on the
Toronto Stock Exchange, from November 2000 to March 2003, and a director since
October 2001. Mr. Mallory was also Interim Chief Financial Officer of
Questerre from September 2004 to September 2005. Mr. Mallory is a Chartered
Accountant and holds a B.B.A. degree from the University of New Brunswick.
William L. McKenzie holds a Bachelor of Science (Honours) degree in
geology from the University of Manitoba and has over 30 years of oil and gas
experience in northeast British Columbia and Alberta. Mr. McKenzie was
recently the Vice-President, Exploration of Aquest Energy Ltd., a public oil
and gas company listed on the Toronto Stock Exchange, from February 2003 to
August 2005. Prior to joining Aquest Energy Ltd., he was a geological
consultant with Cornerstone Energy Inc., a private oil and gas company.
Mr. McKenzie was Exploration Manager and Vice-President of Tikal Resources
Corp., a public oil and gas company listed on the Toronto Stock Exchange, from
January 1998 to January 2002. Mr. McKenzie was also previously the Senior
Exploration Geologist at Poco Petroleums Ltd.
The directors of the amalgamated company will consist of Messrs Kowal,
Mallory and McKenzie and Mr. Melvin H. Chambers. Two additional independent
directors will be determined prior to the special meetings of the Resilient
and Guardian shareholders to approve the Amalgamation.
Melvin H. Chambers has been a director of Guardian since December 2004.
Mr. Chambers is a professional geologist with over 30 years of experience in
exploration and development of oil and gas properties in Alberta, British
Columbia, East Coast onshore, North Dakota and Louisiana. Since May 2005,
Mr. Chambers has been Vice-President of Dyno Energy Ltd., a private oil and
gas company. Prior to joining Dyno, he was the President of I.C. Resources
Ltd., a private oil and gas company, from December 2003 to May 2003. From
September 1998 to December 2003, he was Chief Geologist/Team Leader with
EnCana Corporation and its predecessor, Alberta Energy Company. Mr. Chambers
has a Bachelor of Science degree (Honours) in Geology from the University of
Calgary.
Amalgamation Share Exchange Ratios
----------------------------------
Pursuant to the Agreement, the amalgamated company would have 20 million
common shares outstanding following the Amalgamation. Resilient currently has
12,015,841 common shares outstanding and Guardian currently has
29,516,771 common shares outstanding. Resilient and Guardian have agreed, for
the purposes of the Amalgamation, that the amalgamated company would have a
combined value of $31,850,000 (including the Acquisition but excluding the net
proceeds from the Guardian Private Placement after paying for the
Acquisition), with $3,000,000 of the combined value attributable to Resilient
and $28,850,000 of the combined value attributable to Guardian. Accordingly,
the number of common shares of the amalgamated company each shareholder of
Resilient and Guardian would receive for each of their common shares under the
Amalgamation is determined by the following formulas (where W is the net
proceeds from the Guardian Private Placement, Y is the total purchase price
paid by Guardian under the Acquisition and X is the number of common shares of
Guardian issued under the Guardian Private Placement):
<<
Resilient
-------------------------------------------------------------------------
20,000,000 x ((3,000,000) (divided by) (31,850,000 + W - Y))
------------------------------------------------------------
12,015,841
-------------------------------------------------------------------------
Guardian
-------------------------------------------------------------------------
20,000,000 x ((28,850,000 + W - Y) (divided by) (31,850,000 + W - Y))
---------------------------------------------------------------------
(29,516,771 + X)
-------------------------------------------------------------------------
Amalgamation Agreement Terms
----------------------------
The Agreement contains industry standard representations and warranties
of each party as well as industry standard covenants of each party in relation
to conduct of business until the completion of the Amalgamation. The Agreement
provides that the completion of the Amalgamation is subject to, among other
conditions, (i) the approval of the Amalgamation by the shareholders of each
of Resilient and Guardian, (ii) the approval of the Toronto Stock Exchange,
(iii) the completion of the Guardian Private Placement and the Acquisition and
(iv) the entering into of an agreement between Resilient and an industry
partner under which such partner would agree to sell all of its interests
respecting Resilient's properties to the amalgamated company at closing of the
Amalgamation for US$290,000, with all such conditions to be satisfied on or
before April 13, 2006. The Agreement may be terminated by either party if the
mutual conditions have not been satisfied by this date and the applicable
party if the conditions in its favour have not been satisfied by this date.
The Agreement also provides each party with a "due diligence out" if the party
is not satisfied with its due diligence review of the other party by March 9,
2006. In addition, a break fee of $300,000 is payable under the Agreement by a
party to the other party if, prior to the termination of the Agreement
pursuant to its terms, the first party (i) solicits any discussions,
expressions of interest or proposals from any person(s), or accepts any offers
from or enters into a letter of intent or binding agreement with any
person(s), relating to a possible amalgamation, arrangement or merger or the
sale of all or substantially all of the shares or assets, or any controlling
equity interest, of the party, (ii) does not set a date for a special meeting
of their shareholders to approve the Amalgamation by March 10, 2006 or calls
off such shareholder meeting where it has already been called or does not mail
the joint information circular in respect of the Amalgamation to its
shareholders, or (iii) does not recommend to its shareholders in the joint
information circular that they vote their shares in favour of the
Amalgamation. The break fee is also payable by Guardian to Resilient if
Guardian does not complete both the Guardian Private Placement and the
Acquisition by April 13, 2006.
Shareholder Meetings to approve the Amalgamation
------------------------------------------------
The special meetings of the Resilient and Guardian shareholders to
approve the Amalgamation are expected to be held on April 13, 2006 and the
joint information circular in respect of the Amalgamation is anticipated to be
mailed to Resilient and Guardian shareholders in mid-March.
Forward-Looking Statements Advisory
This news release contains statements concerning Guardian's reserves; the
net present value of future net revenue from Guardian's reserves; the Guardian
Private Placement and the expected closing thereof; the Acquisition and the
expected closing thereof; the reserves associated with, and the net present
value of future net revenue from, the Acquisition assets; Resilient's tax
losses and the realization thereof; the initial production, reserves, net
present value of future net revenue from reserves, tax losses and working
capital of the amalgamated company and the Amalgamation and the expected
closing thereof or other expectations, plans, goals, objectives, assumptions,
information or statements about future events, conditions, results of
operations or performance that may constitute forward-looking statements or
information under applicable securities legislation. Such forward-looking
statements or information are based on a number of assumptions which may prove
to be incorrect. Such assumptions include, among other things: oil and gas
prices, Guardian and the Acquisition assets obtaining production at their
current levels until closing of the Amalgamation, the Guardian Private
Placement closing and raising sufficient proceeds to complete the Acquisition
and the approvals and conditions in respect of the Amalgamation being obtained
when expected. Although Resilient and Guardian believe that the expectations
reflected in such forward-looking statements or information are reasonable,
undue reliance should not be placed on forward-looking statements because
neither Resilient nor Guardian can give assurance that such expectations will
prove to be correct. Forward-looking statements or information are based on
current expectations, estimates and projections that involve a number of risks
and uncertainties which could cause actual results to differ materially from
those anticipated by Resilient and Guardian and described in the forward-
looking statements or information. These risks and uncertainties include, but
are not limited to: volatility of oil and gas prices, fluctuations in currency
and interest rates, product supply and demand, risks inherent in Guardian's
operations, imprecision of reserves estimates, imprecision in estimating
production levels, the results of exploration, development and drilling, the
state of the capital markets and general economic and business conditions. The
forward-looking statements or information contained in this news release are
made as of the date hereof and neither Resilient nor Guardian undertake any
obligation to update publicly or revise any forward-looking statements or
information, whether as a result of new information, future events or
otherwise, unless so required by applicable securities laws.
Oil and Gas Advisory
This press release contains disclosure expressed as "Boe/d". All oil and
natural gas equivalency volumes have been derived using the ratio of six
thousand cubic feet of natural gas to one barrel of oil. Equivalency measures
may be misleading, particularly if used in isolation. A conversion ratio of
six thousand cubic feet of natural gas to one barrel of oil is based on an
energy equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the well head.
The estimated net present values disclosed in this press release do not
represent fair market value.
>>
%SEDAR: 00002500E
